Ukraine Loan – What Will It Cost Poland?

A EUR 90 billion loan for Ukraine, the outcome of the most recent meeting of the European Council, has caused considerable surprise. And although Donald Tusk is trying to turn a solution that is unfavorable for Poland into a success, there is no hiding the fact that it will hit Poles’ wallets. This was calculated by Law and Justice (PiS) MEP Waldemar Buda.

Over the past weeks – it was in vain to look for a Polish representative in talks on peace in Ukraine. When Tusk finally managed to take part in them, it turned out that at the summit in Brussels a decision had been taken aimed at helping the war-torn country. However… not in the way originally envisaged.

Namely – during the latest round of talks, European leaders decided to provide Ukraine with support in the form of a EUR 90 billion loan for the next two years. It will be financed through common debt guaranteed by the EU budget. However, there was no agreement to use frozen Russian assets.

Instead of the option of using the aggressor’s funds, another possibility emerged… Specifically – the leaders decided to take on common debt from which three countries will be “excluded”: the Czech Republic, Slovakia and Hungary.

Loan details

The loan taken out by the European Commission on capital markets and secured by the EU budget will be transferred to Ukraine, which… is to repay it once it obtains reparations from Russia.

The summit conclusions state that until then, the assets of the Russian central bank will remain immobilized, and the Union reserves the right to use them for the purpose of repaying the loan.

What is more – Ukraine will also not have to pay interest on the loans. This will be done by the EU member states. As senior officials at the European Commission told journalists on Friday, this will mean an annual cost for the Community of around EUR 3 billion, which, with EU GDP of EUR 18 trillion, will translate into a deficit increase of 0.02 percent. The level of interest for individual countries will be determined proportionally to gross national income (GNI).

The “exclusion” of the Czech Republic, Slovakia and Hungary will mean that they will not pay interest. Their share, amounting in total to 3.75 percent of EU GNI, will be distributed proportionally among the remaining 24 states. And although Donald Tusk is trying to turn a solution that hits Poles’ – and thus Polish taxpayers’ – wallets quite hard into a success, even “his” media did not spare themselves difficult, yet relevant questions.

Kaleta pointed to ratification

Sebastian Kaleta, a Law and Justice (PiS) MP and former deputy justice minister, pointed out on social media that this form of support for Ukraine requires ratification on the Polish side. “In accordance with Article 89(1)(4) of the Constitution, EU budgets, as significantly affecting Polish public finances, must additionally be ratified by statute by the Sejm and the Senate, and the statute must of course obtain the President’s signature. I remind you that Poland’s burden resulting from its share in the guaranteed loan to Ukraine amounts to approx. EUR 4 billion, not including interest,“ we read in his post.

He added that the issuance of additional EU debt requires, for its validity, the adoption by Poland of a ratifying statute. If Prime Minister Donald Tusk does not present a draft of such a statute to parliament and treats the decision in its current form as binding, he may be violating the law. Kaleta clarified that this concerns the crime of diplomatic treason under Article 129 of the Criminal Code, punishable by up to 10 years’ imprisonment.

How much will Poland pay?

From our perspective, however, the most interesting question is how much Poland will realistically have to pay.

Waldemar Buda, a Law and Justice (PiS) MEP, presented on social media “a calculation of the cost of the loan for Poland, if Russia does not pay reparations to Ukraine (which is obvious), amounting to EUR 600 million/EUR 900 million annually over 30/20 years.“